351:, Loomis' article lionized Jones and his approach. The article's opening line summarizes the results at A.W. Jones & Co.: "There are reasons to believe that the best professional money manager of investors' money these days is a quiet-spoken seldom photographed man named Alfred Winslow Jones." Coining the term 'hedge fund' to describe Jones' fund, it pointed out that his hedge fund had outperformed the best mutual fund over the previous five years by 44 percent, despite its management-incentive fee. On a 10-year basis, Mr. Jones's hedge fund had beaten the top performer Dreyfus Fund by 87 percent. This led to a flurry of interest in hedge funds and within the next three years at least 130 hedge funds were started, including
332:. Jones chose to take 20 percent of profits as compensation, invoking the Phoenician sea captains who kept a fifth of the profits from successful voyages. Initially, he charged no fee unless he made a profit. Jones later added a 2% management fee on all assets, regardless of the performance of the fund. These elements: a partnership structure where a percentage of profits is paid as compensation to the general partner/fund manager, a small number of limited partners as investors, and a variety of long and short positions, are the core elements of hedge funds today. Jones' fee system of a 2% management fee and a 20% fee on gains was also widely adopted by hedge funds and became popularly known as the 2-and-20 model.
33:
436:
291:
series is infinitesimal." Jones was looking for approaches that offered better than a 'fair game.' He noted that certain approaches require trending markets, others work in higher volatility environments, still others in improving credit markets. He was beginning to feel his way down a dimly lit path toward what today would be considered a factor-based approach to portfolio construction.
433:
298:
The research gave him the idea to try his own hand at investing. Two months before the
Fortune article went to press, Jones had established an investment partnership, A.W. Jones & Co., that would exploit this new style of investing. He raised a total of $ 100,000, $ 40,000 of which was his own.
290:
In "Fashions," Jones assessed each approach, sometimes harshly and other times positively. For example, Jones commented on one analysis that "…the market trend succeeded itself 62.5 times out of a hundred and reversed itself 37.5 times. The probability of obtaining such a result in a penny tossing
294:
Jones's comments on
Nicholas Molodovsky's work showed he thought highly of it. In one passage on Molodovsky he said, "Well controlled experimental work of this nature is important and likely to become more accurate as the methods are further developed." He hinted at the approach of risk-weighting
323:
to avoid market risk. He bought as many stocks as he sold, so market-wide moves up or down would be neutralized in the portfolio. The value of the portfolio, then, would not be based on direction of the market but whether the manager had picked the right stocks to buy and sell. The fund avoided
370:
Alfred Jones's investors lost money in only 3 of his 34 years. By contrast, the S&P500 had 9 down years during a similar period. Jones's worst year was the fiscal year that ended on 31 May 1970, when he lost 35.3% (the S&P lost 23.4% over the same period). Alex Porter, one of Jones's
282:
for an article titled "Fashions in
Forecasting", reporting on a new class of stock-market timers and the approaches they employed to call the market. He studied a dozen or so of these "technicians", whose approaches ranged from volume/price ratios to odd-lot statistics to the outcome of the
1043:"Learning to Love Hedge Funds; Hedge funds have been reviled as slick opportunists that fanned the flames of the collapse. Yet Sebastian Mallaby argues that they hold the key to a more stable financial system," Sebastian Mallaby, Wall Street Journal, June 11, 2010
382:
and even tried to establish a "reverse Peace Corps" in which aid recipients would send their own volunteers back to the United States to work with the poor in that country, as a "hedge" against creating a culture of inferiority among developing countries.
311:
fund" and is credited with creating the first hedge fund structure in 1949. Jones referred to his fund as being "hedged", a term then commonly used on Wall Street to describe the management of investment risk due to changes in the financial markets.
254:, in which he describes Jones as "an erudite dandy, a onetime Marxist who hiked to the frontlines of the Spanish Civil War with the writer Dorothy Parker—where they shared a bottle of Scotch whisky with Ernest Hemingway.
371:
portfolio managers, confirmed that their market exposure was aggressive, perhaps up to 120%. By contrast, Jones did relatively well during the market downturn of 1973–1974 by being conservative.
378:, investing its capital in other hedge funds with different areas of expertise and investment styles. He gradually disengaged himself from his office and gave his time to the
1190:
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206:'s rise to power. In 1932, for just under a year he was married to Anna Luise Hauser, née Block (1896–1982), a daughter of the German painter
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459:"The "Background Conditions" of the Hedge Fund in General Electric's Schenectady: Reconsidering the "History of Capitalism""
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174:) and his wife, Elizabeth Huntington. He moved to the United States with his family when he was 4, growing up in
1180:
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343:, adopted the structure that he created, Jones and his structure were not widely known until 1966. That year
275:
191:
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Jones combined two speculative tools to create what he considered a conservative investment scheme. He used
1042:
807:
572:
391:
In 2008, he was inducted into
Institutional Investors Alpha's Hedge Fund Manager Hall of Fame along with
295:
individual stocks, as well as quantifying how far a stock has diverged from its fundamental value.
802:
299:
In its first year the partnership's gain on its capital came to a very respectable 17.3 percent.
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841:"Two and twenty is long dead. Hedge fund fees fall further below onetime industry standard"
573:"The Long and Short of It: You'd be secretive, too, if you were making billion-dollar bets"
167:
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8:
551:
Life, Liberty, and
Property, A Story of Conflict and a Measurement of Conflicting Rights.
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Life, Liberty, and
Property, A Story of Conflict and a Measurement of Conflicting Rights
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83:
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Landau, Peter. "Alfred
Winslow Jones: The Long and the Short of the Founding Father."
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245:
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Comments for the U.S. Securities and
Exchange Commission Roundtable on Hedge Funds.
859:
Comments for the U.S. Securities and
Exchange Commission Roundtable on Hedge Funds.
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Marriage certificate, Amtsgericht Berlin-Tiergarten, Berlin/Germany, Nr. 38/1932
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Brown, Heidi and John H. Christy. "Growing Pains." Forbes 11 June 2001: 74–77.
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Landau, Peter. "The Hedge Funds: Wall Street's New Way to Make Money."
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wrote an article called "The Jones Nobody Keeps Up With." Published in
155:
151:
112:
100:
702:
Absolute
Returns: the risks and opportunities of hedge fund investing
227:
931:
463:
Transatlantica. Revue d'études américaines. American Studies Journal
158:
and is widely regarded as the "father of the hedge fund industry."
214:. In 1936, he married Mary Carter, with whom he travelled through
223:
154:, and sociologist. He is credited with forming the first modern
971:
Alfred W. Jones, 88, Sociologist And Investment Fund Innovator.
534:
Alfred W. Jones, 88, Sociologist And Investment Fund Innovator.
203:
183:
278:. In March 1949, Jones was investigating technical methods of
251:
More Money Than God: Hedge Funds and the Making of a New Elite
1101:
Lindgren, Hugo. "Long-Short Story Short: The Creation Myth."
215:
1034:
Prudence: Paradigm Shift in Pension & Wealth Management.
634:
Prudence: Paradigm Shift in Pension & Wealth Management.
434:
A short history of bankruptcy, death, suicides and fortunes
150:(9 September 1900 – 2 June 1989) was an American investor,
266:
and wrote articles on non-financial subjects such as
16:
American investor, hedge fund manager and sociologist
1191:
Columbia Graduate School of Arts and Sciences alumni
1115:Loomis, Carol J. "Hard Times Come to Hedge Funds."
1108:Loomis, Carol J. "The Jones Nobody Keeps Up With."
1072:
Financial Product Fundamentals: A Guide for Lawyers
170:, the son of Arthur Winslow Jones (an executive of
1080:Jones, Alfred Winslow. "Fashions in Forecasting."
1074:, 11–3, 11–4, 11-5 (Clifford E. Kirsch ed., 2000);
870:Loomis, Carol, "The Jones Nobody Keeps Up With."
564:
1152:
940:"Cohen, Simons, 12 Others Enter Hedge Fund Hall"
570:
947:. Institutional Investor LLC. 23 September 2008
885:From Jones to LTCM: A Short (-Selling) History.
500:. City: Penguin Press HC, The. pp. 17–18.
1003:From Jones to LTCM: A Short (-Selling) History
248:dedicated a chapter in his 2010 book entitled
302:
618:Hedge Funds: Omniscient or Just Plain Wrong?
190:that sailed around the world, he joined the
835:
833:
374:In 1984, Jones transformed his fund into a
307:Jones is credited with coining the phrase "
238:, a survey of attitudes toward property in
161:
1206:Australian people of German-Jewish descent
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234:. He then completed his doctoral thesis,
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328:by limiting itself to 99 investors in a
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222:, reporting on civilian relief for the
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1084:March 1949: 88–91, 180, 182, 184, 186.
528:
526:
1070:Scott J. Lederman, 'Hedge Funds', in
729:
723:
671:
665:
483:– via journals.openedition.org.
1196:20th-century American businesspeople
1143:Strauss, Lawrence C., "The Legacy."
1129:Scholl, Jaye. "Back to the Future."
386:
226:. In 1941, he earned a doctorate in
796:Mallaby, Sebastian (11 June 2010).
523:
457:Huyssen, David (30 December 2020).
13:
763:Lhabitant, François-Serge (2007).
734:The Handbook of Alternative Assets
705:. John Wiley & Sons. pp.
414:List of Columbia University people
262:During the 1940s Jones worked for
257:
210:and a descendant of German banker
14:
1217:
771:. John Wiley & Sons. p.
738:. John Wiley & Sons. p.
571:Patterson, Scott (16 June 2010).
409:List of Harvard University people
335:While a few investors, including
1201:People from Redding, Connecticut
1098:21 October 1968: pp. 20–24.
194:. In the early 1930s, he became
1138:Getting Started in Hedge Funds.
1112:April 1966: 237, 240, 242, 247.
1024:A Short History of Hedge Funds.
997:A.W. Jones, History of the Firm
976:3 June 1989: Section 1, Page 11
915:
893:
877:
864:
851:
814:
789:
657:A Short History of Hedge Funds.
649:
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539:3 June 1989: Section 1, Page 11
182:in 1923, and, after working as
1124:Grant's Interest Rate Observer
1061:'The University of Akron Press
798:"Learning to Love Hedge Funds"
610:
590:
542:
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487:
450:
426:
326:Investment Company Act of 1940
178:, New York. He graduated from
1:
680:. International Monetary Fund
561:The University of Akron Press
419:
319:to buy more shares, and used
1176:American hedge fund managers
1119:June 1970: 100–103, 136–140.
1007:International Herald-Tribune
888:International Herald-Tribune
699:Ineichen, Alexander (2002).
621:NYU Stern School of Business
472:10.4000/transatlantica.15968
7:
494:Mallaby, Sebastian (2010).
402:
125:Anna Luise Hauser née Block
10:
1222:
1066:When Genius Failed' (2000)
963:
674:"Demystifying Hedge Funds"
672:Ubide, Angel (June 2006).
602:UBS Global Equity Research
285:Harvard–Yale football game
236:Life, Liberty and Property
1186:Harvard University alumni
730:Anson, Mark J.P. (2006).
678:Finance & Development
135:
118:
111:Founding of first modern
107:
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60:
39:
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23:
1019:, November/December 2005
162:Early life and education
1171:American money managers
981:Long-Short Story Short.
923:Long-Short Story Short.
803:The Wall Street Journal
767:Handbook of Hedge Funds
198:at the U.S. embassy in
1140:New York: Wiley, 2000.
1089:Institutional Investor
1054:Alfred Winslow Jones,
945:Institutional Investor
596:Alexander M Ineichen,
548:Alfred Winslow Jones,
218:during that country's
1181:Australian economists
1136:Strachman, Daniel A.
1049:Extended bibliography
139:Anthony Winslow Jones
1126:9 October 1998: 1–2.
810:on 9 September 2015.
324:requirements of the
168:Melbourne, Australia
148:Alfred Winslow Jones
72:Redding, Connecticut
54:Melbourne, Australia
25:Alfred Winslow Jones
874:April 1966: 237–247
577:Wall Street Journal
497:More Money Than God
365:Steinhardt Partners
330:limited partnership
232:Columbia University
89:Columbia University
1064:Roger Lowenstein,
989:David A. Vaughan,
905:2007-09-28 at the
900:Jones Model Funds.
890:(December 2, 2000)
857:David A. Vaughan,
639:2007-05-09 at the
616:Stephen J. Brown,
598:In Search of Alpha
557:2007-05-24 at the
439:2009-09-07 at the
361:Michael Steinhardt
276:boys' prep schools
212:Joseph Mendelssohn
180:Harvard University
166:Jones was born in
152:hedge fund manager
101:hedge fund manager
84:Harvard University
1133:31 July 2000: 32.
1103:New York Magazine
1096:New York Magazine
1037:AEI POLICY SERIES
1014:Behind the Hedge.
910:Hedge Fund Review
822:Behind the Hedge.
782:978-0-470-02663-2
644:AEI POLICY SERIES
507:978-1-59420-255-1
387:Legacy and awards
272:farm cooperatives
246:Sebastian Mallaby
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103:, and sociologist
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1022:Alan Rappeport,
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303:The "hedge fund"
268:Atlantic convoys
264:Fortune magazine
172:General Electric
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979:Hugo Lindgren,
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445:Financial Times
441:Wayback Machine
432:Steve Johnson,
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280:market analysis
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258:Academic career
192:Foreign Service
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623:9 March 2001
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580:. Retrieved
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393:Bruce Kovner
390:
373:
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357:Quantum Fund
353:George Soros
345:Carol Loomis
341:Barton Biggs
334:
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208:Joseph Block
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66:(1989-06-02)
18:
1166:1989 deaths
1161:1900 births
1147:31 May 2004
984:NY Magazine
926:NY Magazine
646:15 May 2006
582:31 December
380:Peace Corps
240:Akron, Ohio
196:vice consul
176:Schenectady
128:Mary Carter
64:2 June 1989
1155:Categories
420:References
156:hedge fund
141:Dale Burch
113:hedge fund
99:Investor,
46:1900-09-09
481:234395145
228:sociology
220:civil war
1131:Barron's
974:NY Times
903:Archived
637:Archived
555:Archived
537:NY Times
437:Archived
403:See also
317:leverage
136:Children
1145:Barrons
1117:Fortune
1110:Fortune
1082:Fortune
964:Sources
951:16 June
872:Fortune
684:3 March
349:Fortune
224:Quakers
202:during
119:Spouses
779:
746:
713:
504:
479:
309:hedged
274:, and
204:Hitler
200:Berlin
184:purser
74:, U.S.
607:: 153
477:S2CID
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